Skin in the Game

Should a personal injury attorney require his clients to pay up front for out-of-pocket expenses incurred on behalf of their case? To be honest, I never really gave this question much thought. When I opened my solo practice I just did what my old firm did. I paid the out of pocket expense out of my pocket; and, hopefully, recouped them at the end of the case when it settled or a favorable judgment was entered. A couple of recent cases have me questioning that practice.

Typically, personal injury cases – such as auto accident or slip and fall cases – are done under a “contingency fee” arrangement. This means that the lawyer does not get paid on an hourly basis by the client. Instead, his fee is deferred until the case is over. If the case settles (as most do) or if the court makes his client a monetary award, the attorney takes his fee out of that settlement/award. Thus, the attorney’s fee is contingent on the client getting some type of payment. If the client loses their case, both the client and the attorney are out of luck.

But there is a cost to get to the settlement or court award stage. In a typical personal injury case someone must pay court filing fees, service of process fees, costs to obtain copies of medical records, deposition transcript fees, and (in some cases) expert witness fees. These can total a few hundred to a few thousand dollars. And none of these are the legal fees owed to the attorney for litigating the case.

Normally, my firm pays these costs up front. And for some clients with legitimate claims who can not afford these costs, this is the only way to get to the payout phase. But lately I have had a couple of clients who have not kept up their end of the bargain in terms of being responsive to the needs of the case or considering a legitimate settlement offer. In one of case the client turned down the settlement offer and when asked why they simply said “Because!”

You see, this is easy to do when you don’t have any “skin in the game”. If the client had to lay out money to cover the cost of litigation they might be more responsive and perhaps accept the legitimate offer more readily. But with nothing to lose, there is no pressure on them to do so. Of course I can mitigate this problem by choosing better cases and better clients. But we don’t always have a crystal ball. So I think I am going to have to start and change my ways and amend my retainer agreement to require clients to put up a minimum amount of money to cover litigation costs. Otherwise, it’s only my skin that’s getting burned.

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Written by The Tyra Law Firm

Our firm offers a number of legal services, including Family Law, Estate Planning,Elder Law/Medicaid Planning, and Personal Injury. In each of our practice areas, we are committed to paying close personal attention to every detail, and providing excellent client service.